For all y’all who didn’t get enough of the W. recession, there’s probably gonna be a sequel. And it will start where all modern economic idiocy starts: deregulation (or no regulation as the case may be). One man’s “CAPITALISM OR BUST!” is the 99%’s “BUST.” Of course, one has to regulate before one can de-regulate, and many of the practices seen in The China Hustle represent strategies that are not yet illegal, just slimy. These gambits cost billions in American pension funds between 2008 and 2012, and will cost much more if allowed to continue unchecked. Welcome to the most important film you won’t see this year.
When the housing bubble burst earlier this century, millions of Americans suffered. Personally, I lost a job I loved. While I was busy feeling sorry for myself, however, I didn’t take the time to appreciate the true victims of the crisis. I refer, of course, to investment counselors. One such thief-turned-whistleblower is Dan David who prefaces the documentary with, “There are no good guys in this story, including me.” He’s not wrong. Dan, like many of his type, was devastated by the recession – not only did he lose money, but it also cost him the clients he robs on a daily basis. Just imagine, it’s 2008 and the American economy is going straight down a sinkhole and your livelihood depends on getting people to give money they now have much less to give … what do you sell?
China. China is the answer. While American companies sink, China seems immune. Many Chinese companies are flourishing, or so they tell us. How can we get in on this? And how can we get our investors in on this? It takes a fair amount of gall. Let me illustrate this scam as I understand it: There’s a thriving company abroad, called, say, Beijing Bling. China claims it’s good stuff. You’ve never been there, but why would China lie to you? Thing is, you can’t just put a Chinese company on the NYSE and start sellin’ shares, so what do you do? Well, you find an American company that doesn’t do business any longer but technically still has an operating license, a shell company. Let’s call one such shell company, for sake of argument, “Frog’s Blogs” or something like that. Then you merge Frog’s Blogs with Beijing Bling, you rename Frog’s Blogs as Beijing Bling and *poof* American company. Nothing illegal there, believe it or not.
The documentary gave a full half-hour to this next part, but still didn’t do it justice. No matter how popular, you can’t just take Beijing Bling (nee “Frog’s Blogs”) and set-up a public buy-in on Wall Street. The company has to be vetted, preferably by somebody who vets actual companies. Deloitte and Touche will do. Except Deloitte and Touche doesn’t want to go to China, so they subcontract out to, say, “Deloitte and Touche – Asia.” The latter gets the contracts, does nothing, signs off, and Beijing Bling suddenly appears on the NYSE as a tradable commodity vetted by Deloitte and Touche. And no laws have yet been broken (as far as anyone knows). But you see what happened — a company no American has ever visited or vouched for is suddenly soaring up the NYSE charts.
Fun fact: being Chinese and defrauding a Chinese person or corporation? Big deal. Being Chinese and defrauding anyone or anything foreign? Not even illegal. Not a crime at all. Want my thoughts on this? Too bad, you’re getting them anyway: Yes, it doesn’t have to be illegal to be immoral and, quite frankly, if “it’s illegal” is the only thing that stops you from defrauding the public, you’re a human piece of crap; free free to apply this thought to anything going on in our country right now.
Guess what? It turns out that Beijing Bling is not a dynamic enterprise, but instead barely more than Short Round making a delivery run or two. And the stock price soaring has everything to do with cooking
books (it’s China, so maybe they use a wok to cook the books. Hey, no MSG. I mean it), and nothing to do with the company’s actual products. And if anybody had bothered checking, this would come to light a long time ago.
My favorite part of the whole shebang is the next bit – so here you have a savvy investor in Dan who knows the whole thing is a sham and Americans are going to lose billions. So what does he do? He sells short, of course. May as well make a personal profit on the scam I helped engineer. Ah, American ingenuity.
The scary thing? The China Hustle shows exactly what we haven’t –as a nation- learned from the housing crisis. This is going to happen again and many, many people are going to lose billions, if not trillions, if the government doesn’t start some sort of intervention to make sure practices like the ones described in the film don’t happen. Good thing we have a president and government in place willing to do just that.
Investing reveals openness
Pick wrong and your life is a mess
These guys know the score
They’ll give the what for
Hope you’ve left cash in a mattress
Rated R, 82 Minutes
Director: Jed Rothstein
Writer: Jed Rothstein
Genre: Our screwed present
Type of being most likely to enjoy this film: Boys who cry “Wolf!”
Type of being least likely to enjoy this film: Anybody who appears in the film
